VCP 100: Nominate the Top Utah Founders VCs Must Watch! Nominate Now

Jon Bradshaw & Peter Harris

In today’s episode we find how one gets into Venture Capital. Deep dive into the concept of Syndicate. We talk about best practices, personal learnings and discuss some case studies too.

How to Start a Syndicate

How to Start a Syndicate

In today’s episode we find how one gets into Venture Capital and deep dive into everything about a Syndicate.

Some Points Covered in This Episode Include:

  1. What is a syndicate, and how is it different from an SPV?
  2. What is the appeal of a syndicate?
    1. As an investor
    2. As a company
    3. As a manager
  3. How do syndicate managers/operators make money?
    1. Syndicates also charge carry – usually 20% in total. Carry is a cut of positive returns generated by the investment. Example: let’s say you invest $1000 in a syndicate with 20% carry. If the investment returns $2000, the syndicate would earn $200 in carry. 20% * ($2000 – $1000).
  4. Who are the most common syndicate leaders?
    1. Jason Calcanis
      1. Uber
      2. Calm
    2. Dave Eisenberg
      1. Coinbase
      2. Warby Parker
    3. Tom Williams (from Apple)
      1. Layer 6
  5. How do you manage a syndicate?
    1. AngelList
    2. Assure
    3. Attorney/Accountant
  6. What does it cost to start a syndicate?
    1. AngeList charges a one-time fee of ~$8,000
    3. Hidden costs of finding investors
  7. What are the SEC/accreditation rules for starting one?
    1. Salary of $200k+
    2. Net worth of $1M+
    3. Work in industry
  8. Who should start a syndicate?
  9. Who should not start a syndicate?
  10. Areas of specialization:
    1. Geography
      1. Utah-based
    2. Industry based
    3. Alumni Syndicates
      1. Facebook
      2. AirBNB

Let us know your thoughts on a Syndicate? How do you feel about them? What should we talk about next? Give us a follow and leave us feedback.

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Episode Transcript

Jon: All right, Peter, So from the podcast. Peter, we're becoming famous. And this week I had a chance to go have lunch with a friend's nephew, which is weird. They found out he just found our podcast. He then found out that Utah, he then found out was friends with his uncle. So I had a lunch meeting. Nice. So his question was, is how do I get into venture capital?
Jon: So I think the summary was there's one of two ways I would kind of go about it. So, one, I could intern for a VC fund. Yep. Two, I could create a syndicate to build experience, to find investments for other, you know, for rich people. Sure. And help startup get funded or three, which is the what I recommend the most was go intern with the University Growth Fund for two years and.
Peter: But were a venture fund.
Jon: You were a venture fund, but you're a very different venture fund. That's true because most venture funds, I think they're just going to give you random tasks to go do. Go, go, go, go. Cold call. For example, I've got a friend who you work for Battery Ventures. And all he did was Prospect picking up the phone.
Jon: And I don't think that teaches you how to be a VC. Yeah. So I would not think.
Peter: It would teach you to do, like, one part of being a VC. Like, deal sourcing is definitely part of being a VC, But there's so much more to being a VC, right? Right. But he's like, due diligence was raising funds or taking an LP. There's I mean, you know this, right? But yeah.
Jon: Yeah. So he was hellbent on that. So I said, of all the options, go work with the University Growth Fund. So here's the blog because like not only like you are actually fulfilling the role of a VC and Peter and Tom run you through how to do that and you're making the investment decisions. So it's much more hands on experience and then you're learning on someone else's dime and with great mentorship.
Jon: Because I think to really be great you have to. It's like the 10,000 our principal. But the secret of not only of the 10,000 our principal is you have to have good mentorship. Yeah. You can't just be doing things randomly on your own. Yeah, but.
Peter: Hopefully it's like 10,000 good hours. Not just 10000 hours.
Jon: And hopefully I don't offend him. But I think it's really important to be honest. But I feel like you walked away and be like, I don't want to do the hard thing. I want to do the easy thing. That sounds really cool right now because I'm awesome. Yeah.
Peter: And so what was that thing that he wanted to do?
Jon: The thing you wanted to do is he's like, I want to be a VC, like, as fast as possible today. That's how I read and everything I said, like, Hey, work with Peter. So again, this is my advice not only for him but for everyone is like, Peter's fund is great if you're looking to do it.
Peter: Yeah, well, you can make it work, right? Because you have to be a student. You have to be in Utah or Atlanta or San Diego. So there are some constraints there. But yeah, or try and find some similar experience to what we offer. I mean, one of the fun things about what we do is to your point, right, the students actually drive the process.
Peter: They do the due diligence, they get to vote on the deals, they get to talk directly with the management team and ask the hard hitting questions.
Jon: So but I think that's unique and I don't think a lot of people get that.
Peter: That's true. It is unique. So he wanted to what to go do, send tickets or something like that.
Jon: So I said the other option would be go create a syndicate. And so that's what this podcast is going to be about. And the question would be as if you were starting a syndicate today, which you're not. I would say assume you're not. So this is not investment advice.
Peter: I have too much too much going on.
Jon: This is not legal financial advice.
Peter: This is just Nora, my fundraising.
Jon: Hypothetically, what would you do? So I'm not for fundraising for a syndicate. I have personally rejected the opportunity to start multiple syndicates that we can talk about why I haven't done that, and I'm not doing that. Yeah, but like, we can we can dive into that there. So first of all, Peter, what is a syndicate and why would that be a route for someone who wants to get into venture capital?
Peter: Yeah. So broadly speaking, like the idea and we've talked about this before on the show is if you want to work in venture capital, one of the things that you really need to do is build a track record, especially if at some point you want to raise a fund. And so one of the ideas that I that I've shared many times is go find some, you know, very successful entrepreneur that sold their business.
Peter: They're sitting on, you know, 100 million bucks or something or more and basically say, hey, let me be your guide to go hunt down deals and and do the due diligence and do the heavy lifting and invest your money. Right. And kind of be there arms and legs because, you know, that's something that you can offer, right? Even if you don't have the money.
Peter: And by doing that you can build a track record Like this is essentially what Diogo did right over at Alibaba. And that's kind of how he cut his teeth on venture and that's paid really strong dividends for him. Syndicates is basically taking it one step further ago.
Jon: Diogo did it by partnering with a specific individual or an. Osborn Yeah, who was a high net worth individuals. So he was really kind of like a syndicate for one person.
Peter: And that's what I was going to say, right? That's what I'm saying, is he, he partnered with one person and so like to take it to the next level as a syndicate where you're essentially partnering not with one person, but with multiple high net worth individuals. Right? And so you go and you do the heavy lifting of like hunting down deals, doing the due diligence, getting an allocation and the deal right.
Peter: A lot of those things. And then you go out to your group of high net worth individuals and you gather investment commitments from them. You bundle it all up into typically an SPV, a single purpose vehicle, which is just a legal entity to do one deal. And you invest through that vehicle. Right? That's the basic idea. There's groups like Angel List that have really like institutionalize this Idea, So they have this new product, a new product called Angel Syndicates, where you can basically set up a fund and your high net worth individuals will commit to investing in your fund a certain amount every year.
Peter: Right? So like maybe they commit, I don't know, $100,000 to your fund.
Jon: But you can also each year they can commit per deal.
Peter: To you and they can commit per day or they can like double down on deals that they really like. Right. And then you as a fund manager, get to take some fee off of that. It ranges. But I think it's what, like 10% carry 10 to 20% carry.
Jon: And Jason Calacanis has this like what he calls the syndicate too, right? That's it would be another example. I think he uses a sure to power that one.
Peter: Yeah. But I mean he started on angels.
Jon: Too and got off.
Peter: And got off. But yeah. And there are a bunch of these syndicates out there, usually they, they're surrounded by somebody who has access to deal flow. And this is where it gets really hard, where if you're new to venture, part of the problem you have is like selection bias, right? Where like if you're some upstart with like no experience, no track record, like why and I'm a great entrepreneur, why am I going to give you access to my deal, right?
Peter: If if I'm really that good, I'm going to give it to Jason. I'm going to give it to one of the like many, many other people that have a bigger, stronger brand and track record. Right. And they're going to carry more cash because that's super valuable. Like if I get Jason Calacanis to invest in my startup, you better bet that I'm going to brag about that to like every single other person, whether they're customers, whether they're employees I want to hire, whether they're venture capitalists that I want to raise money from in the future.
Peter: Like there's real value there, right? Because he's built, you know, a pretty strong track record and a very strong brand. So basically, you have a lot of stuff against you right there you're working to working for. So I don't know. But the flip side is you got time, right? Like Jason Calacanis, like, you just have time to go like chase down deals.
Peter: You got to like hire a whole support staff.
Jon: yeah, he's got like an entire team.
Peter: Yeah. So, you know, that is where you can have like a bit of an advantage. It's like, Hey, I'm going to, I'm going to hustle, I'm going to chase down deals.
Jon: But basically syndicates get paid 3 to 8% of the commitment in cash, right?
Peter: Yeah, I mean, it varies. Sometimes it's like sometimes a 2% per year, right? And then. Yeah, and then they're getting. And sometimes they don't even get a management fee. Right? Maybe some in a lot of cases. When Angels first started, if I remember correctly, it was just like you pull it together and you get like 10% of the carry.
Peter: And that was kind of it.
Jon: And some syndicates, you don't even need to put cash in. So like if I were to start a syndicate, I'm not, I would probably create a rule of I'm only going to show you a deal if I'm willing to put five, ten or 20% of the, the allocation in.
Peter: Yeah. Which is a lot right. I mean if you're going to, if you get like $1,000,000 allocation, you got to put in 10%. That's 100 grand out of your pocket. And a lot of people that are just starting in venture capital, they don't have 100 grand to drop on one deal.
Jon: Right. But like, for example, if I were to do one, I would say, hey, give me an allotment for a quarter of a million. Yeah. And I'll put in 25 K So there's 10%. Yeah. And then that would be a much better signal to everyone else involved that I'm fully committed to the deals I'm, I'm bringing to you.
Peter: Yeah, that's true.
Jon: Because anyone can, anyone can put a deal in front of a billionaire. Sure. It's not that hard. Sure. But to actually show commitment and take it to the next level would be a strong signal.
Peter: Yeah, well, I don't know that I would say anybody can put a deal in front of a billionaire, but yeah, certainly like, just throwing deals up against the wall is a lot easier than actually like having some skin in the game.
Jon: I found it really easy as a college student to infiltrate angel investing networks. Yeah. And to, like, hobnob with those people.
Peter: Yeah, that's true. I don't. I'm not saying it's, like, super hard, but, like, you're also, like, a little more, like, outgoing and good at networking.
Jon: Those types of I'm just average guys, just average. So if I can do it, I think a lot of people can do it.
Peter: That's fair.
Jon: so if you were to start a syndicate, how would you do it? Would you? What would you do today? Like, let's say you were this like this individual. You're like, let's just talk about you instead of this individual. That way they can learn from you. Would you focus on an industry? Would you focus on a geographic area?
Jon: Because I think to to really be beneficial for a syndicate, I think you have to have a focus, much like a lot of VC's have a thesis, you can't just be, Hey, here's any deal we find amazing. Hey, there's this really cool biotech company. Hey, there's this solar company we find that's interesting. Hey, there's a, you know, a drug, a consumer product, you know, CPG, consumer product company.
Jon: Let's do this.
Peter: Yeah, No, it's a good question. Look, I think there are two ways to approach it. And and you could do one or the other or both, frankly. So one is to have a strategy where like you were laser focused on to like one thing, right? So, you know, you're like Otto Tech, like that's my thing. Like and I've got I'm going to target investors in the auto tech space.
Peter: I kind of understand it, and I'm going to only do auto tech deals and I'm just going to own that and I'm going to build like a really strong network so I can add tons of value to the companies that I back and like. That's my thing, right? So like very kind of niche focus around what you're going to invest in.
Peter: I think that's one way to go. And if you have a lot of expertise in a particular area or industry like that's there's a lot of value there. I think the other way to go about it is to say, where's the need from the investor base? So like where are people wanting to invest? But for whatever reason they don't have access?
Peter: It could be that they don't have access because they don't have time, which is really my thesis around partnering with high net worth individuals that just sold as company and, you know, mostly wants to sit on the beach. Right. And you can but still wants to do deals sometimes and you can help them with that. Right? So they're not getting access because they don't have the time or they don't want to devote the time, which is totally reasonable.
Peter: Or it could be that like they just frankly don't have the networks, the connections, those types of things. And so then you're trying you're basically creating a product for the that investor base. So like, you know, we've talked about this before. Maybe you set up like a syndicate for executives, right? So you go to, you know, the founder, CEO of a lot of these tech companies.
Peter: Oftentimes has access to great deals right through their networks and their relationships. But the tier down the C-suite and the VP level down another level, they make decent money, right. And especially if they've been hopping startup to startup over the last ten years, they may actually have made like a few million dollars, but they but they may not have the same level of access.
Peter: And so going to them and be and kind of pulling in their checks could be like an interesting strategy, right, Because you're taking advantage of like this pain point in the market where like, maybe they would like to invest, but they don't they don't have the access. So I think that could be an interesting strategy.
Jon: So what like what let's say you like literally start a syndicate today. Where would you focus like this individual? I think we have lunch. Like this is a bad idea. But thinking about it now, I mean, I don't think I'm in the space enough, but he came from the from tech for construction companies and his uncle was saying, hey, you could focus on that.
Jon: So like, if I were like someone, do you think that space is big enough to say, hey, that my focus is going to focus on anything tech related to construction.
Peter: Potentially only because there are probably a lot of people that have made a lot of money in real estate, particularly from like a developer perspective, construction perspective that would like to be investing, you know, diversifying into venture. And you could go to them and raise money from them. Right. And they're frankly like going to be a little bit less sophisticated than like a technology investor, right.
Peter: And so they might be easier to get on to the end of the syndicate and then they can be a source of deal flow for you. They can be a source of deal support for you. And if you got a little bit of experience, like here's the cool thing about the tickets. If you can get one really good, really hot deal to get started, that can create a snowball effect, right where it's like, Hey, I got this deal.
Peter: And once you get that deal, you put that on your resume essentially. And when you meet with the next entrepreneur, it's like, yeah, I did this deal and they're like, wow, that's a great deal. Yeah, sure, we'll carve you in.
Jon: So it's like, boom, startup almost getting Lucy Chartier. One could have totally changed the trajectory of my career. They're lucid charts. What were what, 2 billion.
Peter: Right now Yeah.
Jon: 15,000 to even worth what, 50 million.
Peter: Now? Now, Probably somewhere in that range. Yeah. I mean, I don't know. I don't know exactly where the buy in would have been, but yeah.
Jon: So from that standpoint you think that space is big, big enough.
Peter: Sure, why not? I think so. Like it depends on how like big enough.
Jon: What you've got hesitation. Like I had a hesitation.
Peter: Well, how big do you want to get? Do you want to be managing like $1,000,000,000 something? No, I don't think so. But yeah, like you want to run a syndicate that's maybe deploying $5 million a year? Yeah, probably.
Jon: It's like a lot of syndicate.
Peter: 5 million. You're pulling fee off of that of, like, 2%. That's 100 grand. Plus you're getting the carry on top of that. Like that's not a bad lifestyle. Not a great lifestyle. Yeah. It's not.
Jon: Bad. A lot of syndicates right now I feel like the easiest way where they say we have a competitive advantage. Yeah. Is we focus on a geographic area. So Conway ventures with Trent Mono and Scott Paul. They focus on Utah companies and their source is also Utah executive. Yeah, but beyond.
Peter: That, but I don't think geography is like super interesting to be honest.
Jon: Okay, But that's more I feel like a large majority of them are. We have Beehive venture partners here. Yeah, Utah Focus. Yeah. A lot of this indicates.
Peter: I think most of the syndicates are not geography based.
Jon: Land.
Peter: In. I think they're more personality based.
Jon: How are they personality based?
Peter: There's like Jason Calacanis Right. Okay. People like him right where they've got this like big personality and these, these networks and like that's what the syndicate is really built on. I think that's like the majority of the ones that at least that are successful. I think we, we but you're right, like here in Utah, we do have a bunch because even land and we'll mostly look at stuff local but what's.
Jon: What's a bunch like there's like ten right now.
Peter: Yeah I mean well it depends on how you define Can we talk because you guys, you've got McKay done.
Jon: We do it. Can we keep his name or do we need to bleep it out? He doesn't have a website yet, but he just closed the deal for about an undisclosed amount. But I think his fund, his public or his fund, The sponsor. His syndicate?
Peter: Yeah.
Jon: You've got Landon with a sure assurance fund. Yeah, but you've got Beehive. But they've only done about a couple of deals like land and I think has done far more.
Peter: Than has done a ton a lot of, lot of early.
Jon: Stage deals. Yeah.
Peter: You've got to sound like guys you've got left Lane which does auto tech deals you've got or sorry not left Lane Lane ventures.
Jon: I have no idea. And are these guys doing mostly C deals?
Peter: No, not necessarily. McCaskill's doing like big deals.
Jon: I think McKay was saying he's only interested in deals that are north of a million RR, So that's 1 million annual recurring revenue.
Peter: Yeah. I mean, okay, so Landon does like super early stage deals. I think the Beehive guys also do super early stage seed stage deals. McKay is doing like early stage. I mean, his background is he worked at Signal Peak doing kind of traditional series. So I'd imagine he's probably going to end up doing traditional series type deals, maybe a little bit above the the Lane Capital guys that I was referencing.
Peter: Like they, they've done a bunch of different stuff in auto tech, big and small. The satellite guys have done bigger deals, pretty big deals like I think they were in breeze for example. So, you know, there's and there's probably more syndicate deals getting done all the time. Like frankly, all the angel groups here in Utah, they they kind of our sort of syndicate type deal.
Peter: So.
Jon: Okay. But if you were to start a syndicate today, what would it be?
Peter: Well, I wouldn't be geography and the reason for that. But what would it be? But I just want to say, like, it wouldn't be geography, because, like, if the pandemic taught us anything is like you can work from wherever. So I just think like the returns to geography or.
Jon: You wouldn't create a Puerto Rico syndicate.
Peter: Well, I might from an investor base.
Jon: Okay.
Peter: Because there's a lot of people there, but not to bash on on convoy or anybody that I don't think.
Jon: We're a bastion on convoy.
Peter: A geographic strategy, but.
Jon: I don't think we're bashing anyone here. Yeah, maybe we should bleep our beehive because they've only they've only done two deals.
Peter: Is like ragging on them.
Jon: Don't you know? I like they've got a beautiful site there does two more deal than I've done.
Peter: Yeah. Yeah.
Jon: I've never started a syndicate.
Peter: Okay, so what would I do? I know. That's a good question.
Jon: So this is how I would approach it.
Peter: Yeah, tell me.
Jon: I would probably start a podcast in and in a space. So I would say I'm going to be the expert of SAS and I would build a following. I would this is like, I think we're Seth, you know, Seth Godin, he's a marketer. Yep. He talks about if you want to be a real estate agent, don't be a real estate agent.
Jon: Start join the PTA two years before you want to do that. Now, I know that's like privilege and luxurious. Sure, But like, if you if you start with the end in mind, your goal is for two years. Let's just go build amazing relationships in the space. Yeah. Build a reputation. And then when you come out, you'll come out swinging.
Jon: Because part of why I haven't started a syndicate is one. I'm just too busy. Sure to. It still feels a lot like herding cats. Yeah, and I don't. I'm at the point I would rather own it. Like when I look at my job. In your job I love. I feel like I love being a CEO more than I love being a VC.
Jon: Yeah, because I just. I don't like having to kiss, you know, like, suck up the people. And I'm not good at that. And that's I think when that when I was in the space and I had my.
Peter: Do you think VCs suck up to people.
Jon: I think who said this was a Jason Calacanis he's getting a lot of airtime today. But he said the people who are the best VCs are the ones who kiss the most girls in high school, and that was not me at all. I think kiss a single girl in high school.
Peter: Why does why does he say that?
Jon: I think they're schmoozer and schmooze, like when I think if I were to start a fund who I like, I like I insular go like, Hey, this is the biggest schmoozer I know. Yeah he this person could go get fun.
Peter: Like, see the thing that's funny about that is like I don't know if that's actually true. Like if you look at some of the very best VCs, I have a hard time imagining them as being like the most successful in high school. But could be. I could.
Jon: Be. That's because I don't know. They're fat and bald now.
Peter: Yeah, maybe. But that's not the reasons I'm thinking of.
Jon: But I'm thinking that is. So I would I would focus on building a relationship for two for two years. Yeah. I would probably try to focus on a particular area and then you have a following and then you have leverage and respect that you can build those those relationships. Yeah. And you could help. You could work with them like a billionaire and then one day say, Hey, I'm now going to turn this into a career and use them as like an anchor relationship.
Peter: Yeah.
Jon: Instead of just coming out and saying, Hey, I'm a syndicate. Because if if you don't have a track record or any sort of credibility to anyone who I think is is a smart entrepreneur, you've got to figure it out. Like, like people have approached me for appointment to be a syndicate and I've turned them down specifically because I feel like it's a very negative signal.
Jon: If you come out with a syndicate as like your lead.
Peter: Yeah, I mean, unless you're in it depends on.
Jon: Unless you're doing a sit round. Yeah. But again unless it's like someone like a Jason Calacanis That's true.
Peter: Like a seed round, like it's easier to do if it's like a series B in your lead as a syndicate. Yeah. That doesn't signal. Well, yeah.
Jon: John Bradshaw chooses to bootstrap and self-fund over having an unknown syndicate lead a deal.
Peter: Yeah, that's very personal thought. I think that that could work. Building a community like, for example, one thing that could be kind of cool that comes to mind is like, Hey, I'm going to reach out to all the product, the PMS, all the product managers at all, like the top tech companies. We're going to build like a really cool, fun network.
Peter: We're going to, you know, pull them all in and we're going to do events, we're going to do content, we'll do podcasts, like whatever, build those relationship ups. Because the reality is product managers are the most likely in many cases to go start companies, right? I mean, they basically are running a company within a company. So yeah, so you bring them all in and then you make them your investors for your syndicate.
Peter: And then you're also backing people that come out of that group. So something like that I think would be super interesting.
Jon: What about this executive fund idea that you and I have had? Yeah, I think Peter and I have known each other for so long. I don't know where the idea originated, so Peters could get credit, but I thought it would be an interesting.
Peter: Idea.
Jon: If you had a bunch of executives who put in like 1020 K You're a small number. I know 10 to 20 minutes seem like a lot, but they're almost buying a networking opportunity. So you're kind of like selling a service.
Peter: Yeah.
Jon: But that's like a club. It's like a club, yeah. Where they get to invest and then the startups that they're investing in, in theory, get much better advice. Yeah. Hey, let's get the CMO from from Domo and an investor in this fund. Put in ten or 20 K, But then there's also this expectation that time from the executives will be will be included and that might be one way out compete in that, in that way you could compete geographic somewhat.
Peter: One that I that and I don't actually think this is a great idea for a syndicate but one that is unique is the like and ties into my background is there's a ton of student run funds across the country they're all dying for like good deal flow, whether they know it or not.
Jon: Everyone's dying for a good deal flow.
Peter: And and I mean, usually they're writing like, you know ten K checks into like some start up on campus that's not going to go anywhere. But the idea is basically like, hey, you're trying to provide this educational opportunity for students.
Jon: Are you bagging on campus Founders Fund?
Peter: No, no. I think campus founders sounds great. Okay. But that's.
Jon: The local.
Peter: One here. I'm talking about like, you know, like the University of Missouri has a venture fund, right? Like, what are they investing in? Well, maybe what you do is you you go out to this coalition, right? And you build a syndicate and you're like, Hey, now I've got like 30 student run funds. They're all going to kick in like 50 K or whatever, right?
Peter: So that's like six grand. That's a meaningful check. And then you go to companies and you make this pitch of like, Hey, let us invest like 600 grand, right? And we're going to provide several things for you. One, you're going to feel good about the fact that you just educated like 200 students, Right? And two, if you want to do anything on campus, I can now tap you in to 30 different universities to get your brand out on campus.
Peter: Right. And now you've got like a pretty compelling story that you can pitch to entrepreneurs to get access to their deal and simultaneously, like do a bunch of good with these schools. So like, I think that could potentially work. Now, the downside is these schools are probably not going to be super excited about paying you fees to put this all together.
Peter: So that's maybe why it's not such a great idea. But I do like this idea of like, how can you leverage your investor base, your background to create some sort of competitive edge when it comes to both sourcing deals as well as sourcing investors? Because that's that's the hardest thing, right? Pulling together your syndicate.
Jon: What about creating a substack for two years prior to actually creating a fund or syndicate?
Peter: You know, honestly, like this whole two year thing, it just sounds exhausting.
Jon: It's hard. It's the hard work. It's the secret.
Peter: It is the hard work. It's the secret, right?
Jon: It's like bamboo. Bamboo. You the the seed or whatever is planted, right? Yeah. And it's building its roots. I think this is my this is kind of my frustration with my lunch meeting again. Like, I'm trying to be really open. Critical. Yeah.
Peter: Is that you were like, go do the hard things. And he was like, I don't I want to skip to the fun stuff.
Jon: Everyone wants to enjoy the harvest when the breads are ready to eat. No one wants to go out into the field, plant the seeds in the heat or in the middle of the night.
Peter: But here's the thing that work. Here's the thing. Like what if you're not? If you don't do the hard work first, it's actually harder to do what you want to do and you never do it. And so it never.
Jon: Happens, which is why he should join your fun for two years if you let him.
Peter: In. Yeah, if he could. If he could make the make it over the hurdle, the high hurdle.
Jon: And I think the bar I think going to a bigger a bigger thing that I've seen this week is people always want the easier out. Yeah I had a founder call me today and say John I'm frustrated this I'm super stressed And you said do you expect it to be any different? If it were easy, everyone would be doing it and there would.
Peter: Be no returns, right? There'd be no gain, like if everybody could be and a great amazing entrepreneur and build $1,000,000,000 business, then everybody would do it. And I felt nobody would make any money because this.
Jon: Individual was literally like they said, they had a breakdown, like Nervous Breakdown this week. And I said, it's not going to get better.
Peter: Wow, you're brutal, man.
Jon: But but, but to be okay and recognize that even like individuals like myself, sure. I have the same concerns. What's going to happen? Are we in a market, a recession is going to create a bunch of chain reactions. What chain reactions will happen or not happen? But it's fine to realize that when you're in the trenches, Yeah, it is tough.
Peter: And it's super tough. You know, I heard this thing recently that I thought was interesting to think about, and that is this guy who's a clinical therapist. He was like, is like, you just have to remember that, like, nothing matters. Some things are preferable.
Jon: Okay?
Peter: And so this idea of like, you know, this entrepreneur is going through like a nervous breakdown, he's having a really hard time, etc., etc.. Like if his business fails, it will suck, right? But it's not going to be the end of the world. It would be preferable if it succeeds. Right? But like life will go on.
Jon: Like always goes on.
Peter: So it's like strive for the preferable but be okay knowing that like everything is kind of going to be okay at the end of the day.
Jon: Definitely. Well, thanks, Peter, for sharing your thoughts on a syndicate. And are there any other things you want to share before we wrap up.
Peter: Now, I mean, I think syndicates are super interesting and if that's what you really want to work in venture and you have a hard time like getting in and I find this, this is definitely like a great way to start, right? So but again, like, spend some time, do the hard work, figure out what your strategy is, because it's got to be unique or, I mean, you're just going to really struggle like I've seen all over the years.
Peter: Lots and lots of syndicates are like people do funnel sponsor type stuff and they like Rise and Die, right? They like live off of one deal and then they, you know, something happened like that deal didn't perform well or they just struggled to find another great deal or whatever it is, because at the end of the day, they didn't have anything like super unique.
Peter: They didn't have a competitive edge and they ended up failing. So if you want to go this route, like figure out like what's your edge? And it may be that you need to spend two years developing that edge, in which case do it. And it could be that you already come to the table with something interesting, in which case like look at what you have, leverage that and create a competitive edge to source deals and source investors like those are your two hardest things.
Jon: And build that foundation. It's like code base start code base. I had done the hard work. I had been in India building a product for myself. People naturally started asking me to help them and I was turning them down. Yeah, and because I had that foundation, I wasn't planning to go that route. It was so much easier when I did it.
Jon: And so my point with the with the fund with a syndicate is build those relationships. Now it's so much easier. Instead of you saying, Hey, Peter, I want you to invest in this deal, you're to turn me away. But if I can find ways to find value, help you build a network, build through serving. It's going to be ten times easier in two years.
Peter: Yeah, Plus, I'm just going to trust that you actually know what you're talking about when you bring me a deal. And I'm actually going to spend the time, right? That's part of the hard part here, is that, like, if you are leading the deal, even if you provide as much data about it as you possibly can, the reality is that in private investing, and especially in venture capital, there are massive information asymmetries where you just don't know what's going on right to the full extent possible.
Peter: Even the entrepreneur in many cases doesn't fully know. And so like having more of a track record where you can see around more corners is going to build more trust with your investors, where they're going to be willing to take that leap of faith, of like, okay, well, if John likes this deal, he's kicking in his own money, then this must be an interesting deal, right?
Peter: And that just takes time. You got to be in the trenches. You got to earn the stripes. That's that's got to do the reps.
Jon: That's two plus years. That's like ten. How long have I been in my approaching the 20 year mark? No close. 15 of 15 years of of industry experience.
Peter: Yeah, Well earned.
Jon: All right. Well, thanks, Peter. So if you want to follow us, go to venture Capital FM. You can watch us on YouTube here. We've got Spotify about Apple Podcasts. Please leave a review. Six stars only.
Peter: And hey, if you have ideas for other things, you think we should talk about our questions? Drop them in the comments, let us know.
Jon: Yeah. Go to venture capital that I am. I can still chat with it. So you could just like ping us directly. Awesome. All right, John. Thanks guys.